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May. 1, 2007 at 10:01am Eastern by Danny Sullivan
Microsoft After 24/7; Another Search Engine To Own SEM Firm?
Yahoo said it would acquire an ad network yesterday, in reaction to Google's plans to expand its own ad network by acquiring DoubleClick. Now in One Giant Leap, the New York Post reports rumors that Microsoft might want to buy ad management company 24/7 Real Media.
What's wrong with this picture? The same thing wrong with Google's planned purchase of DoubleClick -- that the move also puts a search engine into the search marketing game.
Performics: "Business As Usual," Despite Google's Planned Purchase covers how Google will need to dispose of the Performics division of DoubleClick if it want to have any credibility as a search engine. You simply cannot -- cannot! -- have your own in-house division designed to help people rank well on your own search engine. It means the entire third party search marketing industry, which already has some mistrust of search engines, is going to lose whatever faith they have left.
Moreover, it's going to leave searchers eventually wondering whether you skew things to ensure that your search marketing division is making money for the company. This is especially tricky for Google. Remember back when it went public, Google told the world in its public filing:
We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept payment for inclusion or ranking in them.
Google might not take payment for putting paid inclusion in its own results, but if Performics becomes part of Google, then Google will be directly taking payment from others who want paid inclusion in Yahoo.
Further in the same filing, Google said:
Some of our competitors charge web sites for inclusion in their indices or for more frequent updating of pages. Inclusion and frequent updating in our index are open to all sites free of charge. We apply these principles to each of our products and services. We believe it is important for users to have access to the best available information and research, not just the information that someone pays for them to see.
Again, while paid inclusion might not be part of Google, Performics itself will be a Google service. If Performics continues to sell paid inclusion, then Google will no longer being applying one of the longest-held principles that it has had. Perhaps the Google culture officer needs to make sure those involved with acquiring DoubleClick understand this key part of Google's culture.
As for Microsoft, it dumped paid inclusion back in 2004, making a big deal of the move being good for searchers. 24/7 is a huge player in paid inclusion services. That's going to put Microsoft back into the space, albeit indirectly, that it once abandoned.
Paid inclusion issues aside, both Google and Microsoft might end up owning search marketing firms. That alone is too much an inherent conflict. Google could have clarified that Performics would be spun off from the very beginning. Instead, we'll almost certainly see this happen, probably announced as part when the DoubleClick deal eventually goes through. Microsoft, if it really wants 24/7, had better seriously carefully consider the conflicts it will face.
Finally, I've got no problem with either Performics or 24/7. Both are companies with great reputations -- and both should thrive on their own. They just don't belong as part of major search engines.
For related discussion, watch Techmeme here.
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By Danny Sullivan
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See Related Stories In: Google: Acquisitions, Google: Critics, Google: SEO, Microsoft: Business Issues, Microsoft: Live Search, SEM Industry: General, SEM Industry: Outsourcing
Reader Comments
Danny - another great article. I'd wandered away from SEL for a while, but it really is essential reading at the moment (not that you didn't know that).
I have one (completely off-topic) question though:
do you use irrelevant anchor text in external links on purpose?
;)
![[TypeKey Profile Page]](http://searchengineland.com/nav-commenters.gif)
All my anchor text is relevant :)
Seriously, you mean like when I linked to a page from the word "dumped," as in above?
In general, I try to put anchors on words that I think are most associated with what I want you to know more about. So the word might not be relevant to the content of the page, but it is relevant to the context of what you are reading and thinking (if I say Microsoft dumped paid inclusion, I suspect you think "they dumped it" and then look to that word to see if there's more info about that particular action).
I respectfully disagree, Danny. As we know (or should... I don't think many are taking this into consideration), the nature of what Performics does is arbitrage. This is the main bread and butter in terms of revs. The game is buy clicks, get paid commissions on actions taken.
Example: Assuming that Performics' AE for Jos A Bank can now "see" (inside GOOG) what Men's Warehouse is paying for "mens pinstripe suit" Jos A Bank has an advantage. Men's Warehouse now has incentive to work with Performics so as to level the playing field. Do they not?
The real issue here is as follows: The NATURE of Performics clients.
Performics clients have been convinced that buying clicks is work. It's something they cannot possibly understand nor execute. This is why advertisers choose to outsource and especially to Performics. I helped launch the firm as the first company to wrap services around affiliate marketing at no additional cost and this has always been the company's point of differentiation. It's carried through into search.
The result is advertisers flock there to access SEM and affiliate programs under one roof AND under the same cost model -- a % of whatever Performics can drive.
This is causing me to fall on one side of fence fairly quickly. That is, GOOG understands this and will leverage it. It becomes a selling point. Rather, the PERCEPTION is.
All they need is a perception that this will create advantage to Performics/GOOG clients. GOOG wins more clients this way and keeps Performics at arm's distance. It can be done.
aQuantive was told they'd never be able to operate Atlas -- all while competing with agencies. They're walking the line just fine for years now. MSN will do the same with 24/7. I haven't heard an argument against any of this other than "this will destroy cred."
Cred? Who buys on cred? Advertisers buy with scale in mind and who scales ad buying (dumbs it down, makes it easy to boot) better than search engines? Answer: Nobody (yet).
Thanks for the response Danny - I can see what you're saying - I guess that I'm just a sucker for a several word link, ie:
Microsoft dumped paid inclusion back in 2004.
But hey, your blog has 10k subscribers - mine doesn't!
;)
"I've got no problem with either Performics or 24/7. Both are companies with great reputations -- and both should thrive on their own. They just don't belong as part of major search engines."
I couldn't agree more, Danny.